Aug 6, 2026 earnings call — Brand elevation and raised full-year outlook
Company raised fiscal '27 constant-currency revenue outlook to 5% to 6% growth.
Revenue $2.0B (est $1.9B) · EPS $4.59 (est $4.32)
Key quotes
"These activations are driving strong, sustainable growth in new customer acquisition and retention."
"By market, China continues to lead our growth with sales up over 40% in the quarter, driven by healthy comps and high-quality new customer recruitment."
"We now expect full year operating margin to expand approximately 60 to 80 basis points in constant currency, up from our prior guidance of 40 to 60 basis points, driven by our better-than-expected Q1 results."
Analyst Q&A 7
brand momentum and gross margin drivers
Q (Matthew Boss · JPMorgan): He asked how confident management is in keeping brand momentum despite lapping big events, whether a stronger luxury market helps or hurts, and if marketing must keep rising. He also asked Justin to break down drivers of the more than 100 basis points of gross margin expansion and whether those are structural.
A: Management said the brand elevation is a multi-year journey across three pillars: storytelling, product breadth, and immersive channels, and they remain comfortable with the 8% marketing investment this year while expecting to invest more as margins expand. Justin said Q1 gross margin beat expectations driven by AUR growth and favorable geo and channel mix, which offset tariffs and some costs, and guided stronger gross margin expansion in the first half with Q2 down 80 to 100 basis points and a full-year view of 50 to 70 bps, noting a tariff assumption of about 10% through the relief period ending in July.
"Q1 gross margin was ahead of expectations, driven by better-than-expected AUR growth and some favorable geo and channel mix, and that more than offset incremental tariffs and some nonmaterial cost pressure." — Justin Picicci (CFO)
AUR elevation and China demand sustainability
Q (Jay Sole · UBS): He asked how far the Ralph Lauren brand has to go on elevation if pricing gets tougher and for any quarter-to-date trends. He also asked Patrice whether China can sustain the 40% growth and how to think about future China demand.
A: Justin said brand elevation is ongoing and AUR is an outcome of product, storytelling and experience; they have multiple durable drivers of AUR and built pricing flexibility, and Q2 guidance reflects Asia leading mid-teens, North America mid-single-digits, and modest EMEA growth. Patrice said China teams are executing marketing, local activations and product strategy well, cited the Polo match live stream scale, noted a disciplined six-city retail approach, and expects China around mid-teens for this fiscal year and low double digits over the three-year plan.
"As we look ahead for this fiscal year, we expect China to be around mid-teens, right?" — Patrice Louvet (CEO)
Europe demand and macro effects
Q (Brooke Roach · Goldman Sachs): She asked for details on brand engagement in Europe, how macro pressures are affecting trends through the summer, and what actions they have to keep growth resilient. She also asked about revenue or margin cadence for the region.
A: Patrice said brand equity in Europe is strengthening across consideration, awareness, Net Promoter Score and luxury perception, and that Germany, Italy and Spain show disproportionate strength; she noted they are investing in activations and new stores but would not comment on summer quarter trends. Justin said they expect low to mid-single-digit growth for the full year with a first-half weighting due to strong comps, and that operating margin should expand from all regions driven by higher gross margin and quality of sales, noting Q1 margin was pressured by marketing timing and one-time activations.
"So similar to what we're seeing around the world, we continue to see strengthening of our brand equity in the European market across the key drivers of consideration, awareness, Net Promoter Score, luxury perception." — Patrice Louvet (CEO)
China and broader APAC performance
Q (Laurent Vasilescu · BNP Paribas): He asked how China trends may evolve through Q2 and the rest of the year, and he asked for color on Japan and Korea within Asia.
A: Patrice said their China strategies are evergreen and execution is strong across marketing, product and go-to-market, and that China has grown from a small share before COVID to now being 10% of the company. She added APAC was up 25% last quarter, Korea has accelerated with local opportunities (including a BTS partnership), and Japan is performing strongly with full-price strength and better-than-expected inbound tourist spending while they celebrate anniversaries there.
"Now China before COVID was 3%. Greater China was 2% of the company. Today, it's 10% of the company." — Patrice Louvet (CEO)
North America mix and marketing level
Q (Michael Binetti · Evercore): He asked how the Q2 North America revenue guide is composed and whether DTC or wholesale drives it, and whether marketing should target the high end of the longer-term guide given the results.
A: Justin said North America is on a strong, high-quality growth path, with balanced mid-single-digit growth expected in Q2 driven by strong DTC and wholesale sell-through, and they can lean into incremental demand when it appears. On marketing, Justin and Patrice said they've steadily increased marketing over the elevation and are comfortable with the 7.5% to 8.5% three-year guide (not a ceiling), they saw good returns and added 1.5 million new customers this quarter, and they will continue to evaluate new spend opportunities by ROI.
"You saw the number this quarter, again, 1.5 million new customers, driving clienteling." — Patrice Louvet (CEO)
non-marketing expense leverage and wholesale role
Q (Dana Telsey · Telsey Group): She asked whether the 90 basis points of non-marketing expense leverage can continue and how wholesale should look as a percentage of the business versus DTC.
A: Justin said their philosophy balances reinvestment for growth with delivering operating margin, and they built cost optimization discipline that delivered Q1 leverage while they increased marketing. Patrice said wholesale plays an important discovery role within their key-city approach, that APAC is mostly DTC so APAC growth will raise DTC share, the current split is 70-30, and they expect a little more than 70% DTC moving forward while remaining focused on elevated consumer engagement.
"Today, the split is 70-30. If you look at just sheer geographical composition and mix, right, APAC is mostly DTC." — Patrice Louvet (CEO)
Europe tourism vs local demand and strategy
Q (Blake Anderson · Jefferies): He asked how much European demand is local versus tourism, any unit or AUR trends, and whether their strategy or outlook has changed for Europe given the environment.
A: Justin said traffic in EMEA is broadly pressured by the macro and slower Middle East tourism, but they offset softer traffic with higher conversion and larger baskets from a resilient core consumer and targeted personalized marketing for pressured segments. Patrice said Europe is about 30% of the company with strong foundations and a reset wholesale business, their longer-term ambition is unchanged and they expect mid-single-digit growth over the three-year period though they are being more prudent this year given the consumer context.
"On the plus side, our brand positioning and our brand strength remains very strong." — Justin Picicci (CFO)